Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/322129 
Year of Publication: 
2025
Series/Report no.: 
IFN Working Paper No. 1526
Publisher: 
Research Institute of Industrial Economics (IFN), Stockholm
Abstract: 
It has been suggested that an intensified trade war between China and the US could reduce CO2 emissions associated with exports. We develop an export-greenfield-endogenous merger model, showing that significantly increased tariffs can enable domestic firms to undertake entry-deterring acquisitions. This forces foreign firms to remain exporters, which, in turn, leads to higher emissions. Strong competition policies and support for green technologies can help address this issue, resulting in lower emissions. Furthermore, we show that implementing an emissions trading system combined with a carbon border adjustment mechanism has effects comparable to those of increased tariffs.
Subjects: 
Tariff war
CO2 emissions
M&A
Endogenous Mergers Emission Trading System
Carbon Border Adjustments
Competition Policy
JEL: 
F23
L40
Q56
Q58
Document Type: 
Working Paper

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